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Mike Fetters, director at jobs website totaljobs.com, said: "Today's figures flatter to deceive. Whilst on the surface they look rosier than those of the past few months, they hide a number of concerns - not least the staggeringly high levels of underemployment.

Elsewhere, the figures showed fewer people aged 65 or under could retire early as they could not afford to stop working.

Ros Altmann, director-general at Saga, said: "People coming up to retirement are increasingly finding their private pensions are not as good as they had hoped - with women particularly having very little private pension. This means they have to stay at work if they want a reasonable income."

She added: "The rise in long-term unemployment for over 50s is very worrying."

Employment minister Chris Grayling said: "Today's figures are a step in the right direction but we still have a long way to go. We are pushing ahead with our strategy to promote investment and new jobs in the private sector and support people currently without work to take up those jobs.

"I am particularly encouraged that overall employment is now growing despite reductions in the public sector.

"There are still economic challenges ahead and the Government is reacting by helping people to find employment through initiatives with the private sector at their heart."

The Government said that in the past month 160,000 incentives of £2,275 had become available to employers who take on young people in the Work Programme as part of the £1bn Youth Contract.